Europe?s largest automotive group, the 200-billion euro Volkswagen AG, is planning to introduce the last remaining car brand from its stable ? SEAT ? into the Indian market to challenge the stronghold of Maruti Suzuki and Hyundai in the Rs 3-5 lakh mass small car segment, industry sources told FE. Based in Spain, SEAT currently sells mostly hatchbacks, such as the Ibiza, Leon, Mii and Altea developed from Volkswagen (VW) platforms, but with a ?sporty? touch.

Sources said SEAT is currently conducting a feasibility study of the Indian market for its products, with a target of entering India in the next three-four years. This is part of a global group strategy to push SEAT in emerging markets after focusing for years on Europe, where it is currently making losses.

In 2013, SEAT?s operating loss rose to 217 million euros from 134 million euros. SEAT, which started sales in China in 2012, would be the eighth VW car brand in India after Skoda, Volkswagen, Audi, Porsche, Bugatti, Bentley

and Lamborghini.

?The market study for SEAT is currently underway and the broad plan is to tackle the entry car segment, which none of the VW brands are addressing today. While Skoda last year discontinued the Fabia, the cheapest model for the group ? Volkswagen Polo ? currently starts at about R5 lakh. There is a big white space below in a segment where the Hyundai i10 and Maruti WagonR are major contenders,? a source close to the development said. SEAT officials, however, did not reply to an email questionnaire.

SEAT is expected to focus on high localisation levels to keep costs low and utilise the VW Group plant at Chakan (near Pune) for manufacturing.

VW recently invested R240 crore in an engine plant at the facility, which at full capacity can make up to 2 lakh cars a year ? it can currently make 1.3 lakh units. The group, which has invested about R5,000 crore in India till date, also has a second facility at Aurangabad to assemble its premium cars, like the Audi.

Gaurav Vangaal, analyst for light vehicle forecasting at IHS Automotive, said, ?SEAT majorly concentrates on the B-segment, the segment which is very significant for India. It will be difficult for any car manufacturer to ignore an emerging market like India at a time when it is bouncing back. But it will be interesting to see how Volkswagen positions another brand in India with its existing mass segment brands VW and Skoda.?

A new mass brand for the entry small car segment is felt necessary for the VW Group, especially when its current brands in the segment are not doing well. In FY14, Volkswagen and Skoda posted a 20% (to 52,528 units) and 31% (to 19,959 units) drop, respectively.

This fiscal (April to August) sales for both brands are down 34% and 33% as well. However, the group did well in the luxury segment, with Audi emerging on top in 2013 with a 11% rise to 10,002 units.

The introduction of SEAT might prove timely because the Indian car market is believed to now expand after a two-year lull. Sales growth became positive since May this year and passenger vehicle sales (including cars, utility vehicles and vans) in the April-August FY15 period are up 4.5% to 10.28 lakh units.